Flight Centre Travel Group (ASX:FLT) is set to distribute a dividend of A$0.11.

March 04, 2025 04:04 PM AEDT | By Team Kalkine Media

Flight Centre Travel Group (ASX:FLT) is set to distribute a dividend of A$0.11. — Image source: Shutterstock

Earnings Coverage and Sustainability

The current high yield, however, may raise questions about its sustainability. Previously, the company distributed a substantial portion of its earnings, constituting 97% of cash flows. This scenario poses a risk where diminished cash flows might necessitate a lower dividend payout.

Encouragingly, forecasts project an EPS growth of 183.8% for the upcoming year. Should the current dividend trends extend, the payout ratio may decline to 25%, aligning more comfortably with sustainability targets.

Historical Dividend Trends

While Flight Centre Travel Group has maintained a long-standing dividend history, it has experienced at least one reduction over the past decade. Since 2015, annual dividends have decreased from A$1.52 to A$0.60, translating to a reduction rate of approximately 8.9% per year. Typically, declining dividends might signal underlying business challenges.

Growth Outlook

Despite recent downward trends, upcoming projections suggest a positive outlook with rising earnings. However, it is prudent to await consistent performance before forming any definitive conclusions regarding sustainable growth.

Considerations for Investors

Ultimately, stable dividends are usually preferred by investors. Other factors should be considered before committing to Flight Centre Travel Group. For a broader perspective, exploring various dividend stocks with promising records may offer valuable insights.

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